Total Fund Deposit and discount rate

Find out about the Total Fund Deposit and the discount rate.

What is the Total Fund Deposit?

The Total Fund Deposit amount (TFD) is the amount of money set in a Biodiversity Stewardship Agreement (BSA) to cover future land management costs. Total Fund Deposits are paid into the Biodiversity Stewardship Payments Fund (BSPF) when credits are sold. Through the Biodiversity Conservation Trust, this fund then makes annual payments to the landholder to cover costs of land management under the Biodiversity Stewardship Agreement management plan. The Biodiversity Conservation Trust is responsible for managing and investing the funds held in the Biodiversity Stewardship Payments Fund.

What is the discount rate for Total Fund Deposits?

Under the Biodiversity Conservation Act 2016, the department determines the Total Fund Deposit amount. This is calculated as the amount of money that needs to be invested now to fund the agreed management actions at a Biodiversity Stewardship Agreement site into the future. A discount rate is used in the formula to work out how to cost land management over time. The discount rate is regularly reviewed based on advice from financial experts.

The department uses the following formula to determine the discount rate:

BSPF
rate of return		 – Biodiversity Conservation Trust costs of managing the BSPF – Minister's risk tolerance margin =  TFD discount rate

The discount rate is regularly reviewed to ensure that it reflects long-term return forecasts for the Biodiversity Stewardship Payments Fund, management costs and risk tolerance.

The most recent review was undertaken in July 2022, where it was determined to increase the discount rate from 2.6% to 3.2%. An increase in the discount rate means a decrease in the amount of the Total Fund Deposit payment.

The revised discount rate will apply to all Biodiversity Stewardship Agreements entered into from 15 August 2022.

The Credits Supply Taskforce will work with applicants to ensure their Biodiversity Stewardship Agreement includes a Total Fund Deposit amount based on the relevant discount rate. This means that Biodiversity Stewardship Agreements approved on or before 14 August will have a Total Fund Deposit based on the discount rate of 2.6%. Biodiversity Stewardship Agreements made on or after 15 August will have a Total Fund Deposit based on the new discount rate of 3.2%. The updated Total Fund Deposit Calculator with the new discount rate is available below. For most Biodiversity Stewardship Agreement applications, updating the Total Fund Deposit Credit Calculator and providing this to the Taskforce will be a simple task.

For applicants in the late stages of finalising their agreement, the Taskforce will work directly with you and your accredited assessor to update the Total Fund Deposit amount for inclusion in the final agreement.

Landholders who apply for a Biodiversity Stewardship Agreement after 15 August 2022 must use the new version of the Total Fund Deposit Calculator that includes the new discount rate.

Total Fund Deposit Calculator

The Total Fund Deposit Calculator helps estimate the Total Fund Deposit amount and payment schedule.

The costs of managing a Biodiversity Stewardship Agreement site will vary according to its size, location, vegetation type, cover and condition, topography, fencing and possible boundary management issues. These factors all influence the Total Fund Deposit needed to cover the costs of managing the Biodiversity Stewardship Agreement site in perpetuity. The management actions at the Biodiversity Stewardship Agreement site are determined by applying the Biodiversity Assessment Method.

This Total Fund Deposit Calculator breaks down specific management actions and plans into individual tasks for the short and long-term and helps determine the frequency of the actions. Landholders can price each task based on the current costs of materials and labour. All estimated annual costs should be entered on the calculator. The landholder should enter costs at current dollar value as the discount rate will automatically apply to determine future costs.

Current and previous calculator spreadsheets

 

Visit the Biodiversity Conservation Trust for more information about stewardship sites